Elon Musk's Bold Predictions Send Bulls Running to TSLL
Despite Tesla's struggling core EV business, investors remain bullish as the TSLL ETF has scooped up nearly $600 million in inflows this year.
Tesla Inc.’s electric-vehicle business may be struggling, but investors don’t seem to care as they focus on the company’s futuristic bets on autonomous vehicles and humanoid robots.
The focus on the future extends to investors in leveraged ETFs tied to the company, like the Direxion Daily TSLA Bull 2X Shares (TSLL).
Since the start of the year, $580 million has flowed into the exchange-traded fund, including $45 million Thursday, the day after Tesla’s fourth-quarter earnings conference call in which CEO Elon Musk made extremely bullish pronouncements about the future.
Tesla could eventually be worth “more than the next top five companies combined,” he predicted while announcing that the firm would launch a driverless robotaxi service in Austin, Texas, this summer and build several thousand Optimus robots by the end of the year.
The bullish reaction in Tesla’s stock last week in the face of disappointing results for Tesla’s core electric vehicle business sparked debate about the true value of the company.
Tesla Bulls Are Winning
Tesla trades at a sky-high forward price-to-earnings ratio of 133 despite slowing sales and profits. Bulls argue, however, that analyst estimates for revenue and earnings in the coming years don’t account for the massive potential gains from robotaxis and robots.
For now, the bulls are winning. Shares of Tesla have nearly doubled since Oct. 23, fueling a threefold gain for TSLL in that same period.
The ETF boasts $5.1 billion in assets under management, putting it neck and neck with the GraniteShares 2x Long NVDA Daily ETF (NVDL) as the largest single-stock ETF on the market.
However, both Tesla stock and TSLL are down 14% and 30%, respectively, from their all-time highs set in mid-December last year.
If Musk can deliver on his futuristic promises, perhaps they’ll reach new highs. Otherwise, Tesla's astronomical valuation could come crashing back to Earth.